investigating factors affecting efficiency of pension
TRANSCRIPT
Investigating factors affecting efficiency of pension administration system in North-West province
Moruledi Brenda MOREENG-MOGOTSI
orcid.org 0000-0002-1071-4491
Dissertation accepted in fulfilment of the requirements for the degree Masters of Business Administration (MBA) at
the North-West University
Supervisor: Dr. Joseph Nembo Lekunze
Graduation ceremony: April 2019
Student number: 16548205
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Contents
LIST OF FIGURES ................................................................................................... V
LIST OF TABLES ..................................................................................................... VI
ACKNOWLEDGEMENTS ....................................................................................... VII
ABSTRACT ............................................................................................................ VIII
LIST OF ABBREVIATIONS ..................................................................................... IX
CHAPTER ONE: INTRODUCTION TO THE STUDY ............................................. 10
1.1. Introduction ............................................................................................. 10
1.2. Background to the study ......................................................................... 10
1.3. Background to the problem statement .................................................... 12
1.3.1. Problem statement .................................................................................. 12
1.4. Research Questions ................................................................................ 13
1.5. Objectives of the study ............................................................................ 13
1.6. Motivation for the study ........................................................................... 14
1.7. Significance delimitation of the study ...................................................... 14
1.8. Research design and Methodology ......................................................... 15
1.9. Theoretical Framework ........................................................................... 15
1.10. Definition of the key concepts ................................................................. 16
1.11. Summary of chapter one ......................................................................... 17
CHAPTER TWO: LITERATURE REVIEW .............................................................. 18
2.1. Introduction ............................................................................................. 18
2.2. Nature of the pension administrative system in SA ................................. 18
2.3. Administration of pension fund system in the North West Province ........ 22
2.4. Quality of the Pension Administrative System ......................................... 23
2.5. Factors responsible for poor quality of services to beneficiaries ............. 23
2.6. Inefficiency and operational challenges the in the GEPF system ............ 25
2.7. Factors affecting efficiency of the system ............................................... 26
2.8. Impact of the GEPF inefficiencies to the beneficiaries ............................ 30
2.9. Methods used to investigate inefficiencies in the pension fund system ... 30
2.10. Summary of the chapter .......................................................................... 33
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CHAPTER THREE: RESEARCH METHODOLOGY ............................................... 34
3.1. Introduction ............................................................................................. 34
3.2. Research Paradigm ................................................................................ 34
3.3. Research design that will be influenced by Research Paradigm ............. 35
3.4. Population and Sampling ........................................................................ 36
3.4.1. Target Population .................................................................................... 36
3.4.2. Sample size and sampling procedure ..................................................... 36
3.4.3. Response rate ......................................................................................... 37
3.4.4. Inclusion and exclusion of criteria ........................................................... 37
3.5. Data collection and instrument used to collect data ................................ 37
3.5.1. Pilot testing.............................................................................................. 38
3.6. Data analysis and tools ........................................................................... 38
3.7. Validity and Reliability ............................................................................. 38
3.8. Ethical Consideration .............................................................................. 39
3.9. Summary of the chapter .......................................................................... 40
CHAPTER 4: DATA ANALYSIS AND RESULTS .................................................... 41
4.1. Introduction ............................................................................................. 41
4.2. Personal information of customers .......................................................... 42
4.2.1. Gender of sample Beneficiaries .............................................................. 42
4.2.2. Age distribution of beneficiaries by group ............................................... 43
4.2.3. Beneficiaries level of Education .............................................................. 44
4.2.4. Nature of customers employment ........................................................... 45
4.2.5. Designated official to customers ............................................................. 46
4.2.6. Access to GEPF systems by beneficiaries .............................................. 46
4.3. Statistical analysis on perception by beneficiaries based on three constructs ................................................................................................................ 47
4.3.1. Analysis on service quality by beneficiaries ............................................ 49
4.3.2. Analysis of system use by customers ..................................................... 49
4.3.3. Analysis of user satisfaction by beneficiaries .......................................... 49
4.4. Personal information of GEPF employees .............................................. 49
4.4.1. Gender distribution of GEPF employees ................................................. 49
4.4.2. Age distribution by groups of GEPF employees ...................................... 50
4.4.3. Level of education of GEPF employees .................................................. 51
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4.4.4. Nature of employment of GEPF employees ............................................ 52
4.4.5. Designated employees to customers ...................................................... 52
4.4.6. Employees access to GEPF.................................................................... 53
4.5. Statistical analysis of GEPF employees based on six constructs............ 54
4.5.1. Analysis of system quality by GEPF employees ..................................... 57
4.5.2. Analysis of information quality by GEPF employees ............................... 58
4.5.3. Analysis of service quality by GEPF employees ..................................... 58
4.5.4. Analysis of system use by employees ..................................................... 58
4.5.5. Analysis of user satisfaction by GEPF employees .................................. 59
4.5.6. Analysis of net benefits by GEPF employees.......................................... 59
4.6. Means score test on customer perception using personal characteristics60
4.6.1. Means score test on gender of customers .............................................. 61
4.6.2. Means score test by age group of customers.......................................... 61
4.6.3. Means score test by level of education of customers .............................. 61
4.6.4. Means score tests by nature of employment of customers ..................... 61
4.6.5. Means score test by designation to customers ....................................... 62
4.7. Mean scores of employees perception using personal characteristics .... 62
4.7.1. Means score test by gender of GEPF employees ................................... 63
4.7.2. Means score test by age group of employees ......................................... 63
4.7.3. Means score test by level of education of employees ............................. 64
4.7.4. Means score test by nature of employment of employees ...................... 64
4.7.5. Means score test by designation of employees....................................... 64
4.8. Chapter summary .................................................................................... 64
CHAPTER 5: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS ............. 65
5.1. Introduction ............................................................................................. 65
5.2. Discussion of findings ............................................................................. 65
5.3. Conclusion .............................................................................................. 68
5.4. Managerial implications ........................................................................... 69
5.5. Recommendations .................................................................................. 69
REFERENCES ....................................................................................................... 71
APPENDIX I: RESEARCH INSTRUMENTS ........................................................... 78
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STAFF SURVEY QUESTIONNAIRE ...................................................................... 78
CUSTOMER SURVEY QUESTIONNAIRE ............................................................. 82
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List of figures
Figure 2. 1: DeLone and McLean (2003:75) .................................................................. 27
Figure 2. 2 Enterprise systems success (Sedera & Gable, 2004:45) ............................ 29
Figure 4. 1 Gender ........................................................................................................ 42
Figure 4. 2 Age group .................................................................................................... 43
Figure 4. 3 Level of education ....................................................................................... 44
Figure 4. 4 Nature of employment ................................................................................. 45
Figure 4. 5 Designation ................................................................................................. 46
Figure 4. 6 Access to the system .................................................................................. 47
Figure 4. 7 Gender ........................................................................................................ 50
Figure 4. 8 Age group .................................................................................................... 51
Figure 4. 9 Level of education of employees ................................................................. 51
Figure 4. 10 Nature of employment ............................................................................... 52
Figure 4. 11 Designation ............................................................................................... 53
Figure 4. 12 Access to the system ................................................................................ 54
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List of Tables
Table 3. 1 Reliability test ............................................................................................... 39
Table 4. 1 Analysis on the perception beneficiaries based on three constructs ............ 48
Table 4. 2 Analysis of perception by GEPF employees based on six constructs .......... 55
Table 4. 3 Means scores tests on customer perception using personal characteristics 60
Table 4. 4 Mean scores of employee’s perception using personal characteristics ........ 62
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ACKNOWLEDGEMENTS
I acknowledge all those who supported me in my MBA journey. I start by thanking
Almighty God who gave me strength to persevere throughout the journey. Special thanks
go to my supervisor who did a sterling job to ensure that I compiled this document. I would
not have achieved this without his advice. I appreciate your unfailing support from the
deepest of my heart, Dr JN Lekunze. I thank the staff at the North-West University
Business School, my employer, the Government Pensions Administration Agency, and
all fellow classmates who played a fundamental role in my achievements. I thank my
children, Keorapetse and Mompati, who supported me in my studies. I love you dearly
my children, God bless you and Maausi who took care of you during my absence.
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ABSTRACT
The study seeks to investigate the factors affecting the efficiency of pension fund system
in the North West Province. Government employees in South Africa subscribe to the
Government Employee Pension Fund (GEPF) to preserve money for retirement. The
processing of pension claims by GEPF utilises a pension case management system for
processing pension pay-outs. The system was introduced as an intervention to the
challenges that were raised by members about the delays in the pension pay-outs. The
objective of this study was to investigate the quality of the GEPF system and to determine
the factors responsible for the poor quality, including the impact of system inefficiencies
on the lives of the beneficiaries in the North West province. The study explores
frameworks used by other researchers to analyse pension fund management systems
across the world and its impact on the lives of beneficiaries. The study adopted a
qualitative research approach derived from post positivism.
Data was collected using questionnaire from both customers (beneficiaries) and
employees of the GPAA. The data was captured and SPSS was used to analyse the data.
Key findings show that the perception of employees, and customers (beneficiaries) based
on service quality, information quality and system quality concur with the notion that the
pension fund system in the North West province operates efficiently and effectively.
However, the study found that delays in payments of pension pay-outs were caused by
employees operating the system. These key findings are supported by Delone and
Maclean (2003:75) model which explains that when analysing the effectiveness of the
system, these constructs must be considered. The majority of the respondents concur
that the GEPF system satisfies all these constructs. The respondents have indicated that
the system is easy to use, accurate and produces reports on time. With regard to the
three constructs; system quality, information quality and service; the model explains that
they contribute positively to how the system is used and the user satisfaction which
ultimately produces net benefits for the individuals, groups and the organisation. Although
customers have raised concern with delays in pension pay-outs, the study has
established that the problem is not with the system per se.
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List of abbreviations
ANOVA Analysis of Variance
AS Automated System
GEPF Government Employee Pension Fund
GPAA Government Pensions Administration Agency
IS Information System
ISSM Information System Success Model
IT Information Technology
MS Manual System
NWP North West Province
PCM Pension Case Management System
SEM Structural Equation Model
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CHAPTER ONE
INTRODUCTION TO THE STUDY
1.1. Introduction
The study aimed at analysing factors that affect efficiency of pension fund administration
system in the North West province of South Africa. Chapter one focuses on the
background to the study and problem statement. The research questions, objectives and
sub objectives of the study, motivation for the study and significance of the study are also
discussed in this chapter. The chapter further outlines the delimitation of the study, the
definition of key concepts and closes with a chapter summary.
1.2. Background to the study
Globally, the use of technology and innovative practices has become instrumental in
enhancing the performance of institution, contributing to an emergent model of doing
business (Loudon and Loudon, 2012: 375; Shaikh and Karjaoluoto, 2015: 550).
Developed and developing economies are investing in research to improve service
delivery and systems infrastructure to enhance performance and increase efficiency in
public services (Llyod-Sherlock and Agrawal, 2014: 1600). Investments in systems
infrastructure have evolved in many functional areas of business operations, including the
pension case management system (Andersen et al., 2014: 1050) - a development that
has resulted in improved and efficient performance of the pension systems across the
world. Cumulatively, these improvement have shown improved service delivery benefits
to recipients (Lippi, 2016: 23).
In Sub-Saharan Africa, the pension funds schemes and systems implemented across the
continent are not homogenous. The reason is that there are differences in policies and
legislations under which the pension fund management systems operate. In South Africa,
the legislation governing the pension fund scheme include: the Pension Act 24 of 1956
(Government 1956), which over time, has undergone different amendments and reforms
(Sigwadi 2013: 1150), leading to the establishment of the Government employees’
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Pension Funds (hereafter refer to as GEPF) to manage the pension fund of public
servants in South Africa (Sigwadi 2013: 1094)
According to the Government Employees Pension Funds Report (2014:10), the GEPF
was mandated to perform a number of reforms which, among others, were aimed at
ensuring effective, reliable, and timely provision of pension services with focus on funds
such that pensioners are socially and economically well supported (Sigwadi 2013: 1099).
This was accompanied by the enactment of the Retirement Act of 2014 that principally
ensured that the retirees are efficiently supported and their well-being properly looked
after. In spite of these legislations, little is known about the factors that affect the efficient
operations of the pension funds system in South Africa and the North West Province in
particular. Numerous capacity development initiatives aimed at improving the pension
funds management system have been introduced and implemented over the years,
ranging from employees development, office automation, and putting in place structures
aimed at improving the efficient and effective service delivery of the pension funds.
Furthermore, several studies (Lloyd-Sherlock & Agrawal 2014:1575; Chatz, Gómez-
Olivé, Ralston, Menken & Tollman 2012:1577) in South Africa posit that the rapid increase
in poor households can be attributed to the increasing number of retirees who depend on
their pension for survival. The efficient implementation of the GEPF system is very crucial
in alleviating the challenges retirees confront in accessing their pension benefits. The
majority of elderly retirees in the country suffer challenges ranging from delays in the
payment of monthly pension benefits, inadequate communication from the pension
administrators to the retirees or poorly trained administrators who do not understand the
workings of the system. Furthermore, there have been studies in South Africa on the
elderly which have explored the income stabilisation among the elderly. These studies
focus on the social safety nets in general (Harenberg, Ludwig & Maus 2013:8; Lloyd-
Sherlock, Barrientos, Moller & Saboia, 2012:12 ). However, research associated with
factors affecting pension funds efficiency and systematic implementation of the system to
ensure that the safety net of retirees are properly implemented at a local level is scarce.
Based on this outline in the argument, this investigation into the factors affecting the
efficiency of the pension funds systems at the provincial level is crucial.
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1.3. Background to the problem statement
In South Africa, the Government Pensions Administration Agency (GPAA) is a
government component that reports to the Minister of Finance and administers funds and
schemes on behalf of the Government Employees Pension Fund (GEPF). The GEPF is
the largest pension fund system in South Africa (GPAA, 2018: 175). The agency
administers the pension affairs of approximately 1, 7 million government employees and
pensioners, as well as the affairs of their spouses and dependants in South Africa (GPAA,
2018:176). In 2012, a report by the International Organisation of Pension Supervisors
revealed that the South African pension fund system has challenges with ‘coverage of the
pensioners’ demographics, means test accuracy and ‘leakage’ that led to the government
proposing reforms (Sigwadi 2013: 1098). In 2017, there was an acknowledgment by the
Public Service Commission and the Public Service and Administration Performance
Monitoring and Evaluation Committee in the South African National Assembly that there
were delays in the pay-out of pension benefits to retirees in South Africa (Parliamentary
Monitoring Group, 2017:10). Hunter (2017: 5) added that in South Africa there exist a
large number of retirees who witness delays in unpaid pension fund benefits that can be
attributed to inefficiencies in the administration of the pension fund system. This
indictment on the inefficiency of the system spurred this investigation so that plausible
solutions and recommendations could be submitted to the relevant stakeholders.
1.3.1. Problem statement
In North West Province, majority of the pensioners are not satisfied with prolong delays
in accessing their pension funds from the pension administrators. A study by Purce,
(2014:10) points out that, the delays are caused partly by failure of the employees within
the organisation to understand fully the requirement needs of the pensions funds systems
as well as delays in operations reconciliation to meet the needs of the customers
(pensioners) on time (Cabeza, 2015:825, Chaudhry et al., 2006:760). Consequently,
pensioners are experiencing financial difficulties in meeting their daily needs. The delay
in accessing their monthly financial benefits from the pension funds systems caused by
delays in the fund’s administration system have led to many customers (pensioners,
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beneficiaries) to borrow money from microfinance firms at exorbitant interest rates which
further entrench poverty and suffering amongst beneficiaries. Although some studies
have attributed the delays in operational inefficiencies in the funds management system
(Harenberg et al., 2013:22-23), there have been limited studies on the factors and causes
of the delays in the fund’s operational management systems resulting to these delays
especially at local or provincial levels in South Africa.
1.4. Research Questions
Based on the research problem as well as the background to the study, the following
research questions are raised:
What are the personal characteristics of beneficiaries and employees
involved with the GEPF system?
What is the quality of GEPF system used in South Africa?
What are the factors responsible for poor quality services provided to
beneficiaries?
Are poor quality services to customers a result of administration
inefficiencies or operational system failure?
What are the impact of system inefficiencies on customers (beneficiaries)?
1.5. Objectives of the study
Based on the problem statement and research questions, the main objective of the study
was to investigate the factors affecting the efficiency of the Pension Fund Administration
system known as the Pension Case Management system in the North West Province in
the delivery of quality services to customers. The main objectives of the study are further
categorised under the following sub objectives in order to close the existing gap in
literature identified in the problem statement.
To investigate the personal characteristics of beneficiaries and employees
using the GEPF system.
To investigate the quality of the GEPF system used in the North West
province.
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To determine factors responsible for the provision of poor service quality to
customers (beneficiaries).
To determine if the poor quality service are cause by administration
inefficiencies or operational failure in the system.
To determine the impact of the system inefficiencies on the lives of
beneficiaries.
To determine the overall satisfaction in use of the Government Pension
Administration Agency (GPAA) system in the North West province.
1.6. Motivation for the study
The South African Pension fund management system has received a lot of attention from
the media in the past few years (Hunter, 2017:11). The main focus was on funds that
have remained unclaimed in the private sector. The unclaimed funds in the GEPF system
can either be attributed to administrative inefficiencies, operational failures or both caused
by unknown factors, especially at a local and provincial level. Furthermore, literature with
regard to the GEPF management system as a whole in South African is limited and
studies on this facet have largely not focused on the factors affecting the efficiency of the
Pension fund Administration System.
1.7. Significance delimitation of the study
This study is significant in contributing knowledge to the existing literature on the Pension
Case Management System of South Africa especially at a local level. The study adds to
researchers’ understanding of the dynamics of developing an efficient Pension Fund
Administration system. The study further helps in understanding the complex nature of
Government Pension Fund Systems and how these affect efficiencies in the system in
South Africa and Africa. The study therefore significantly contributes to knowledge and it
is expected to inform many future studies on pension case management systems in the
future.
Findings from the study can contribute to the limited literature available on efficiency of
the Pension Case Management System at a local level since most studies have focussed
on the national, continental and international level. In addition, the findings of the study
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add to the understanding towards improvement in the information quality of the Pension
Case Management System to the benefit of the organisation as well as beneficiaries. The
results of the study could be used by the National and Provincial GPAA in the
development of effective pension management system, which will result in improved
service delivery. Since there is limited literature on the Pension Case Management
system in the South African context, the study aims to fill in a gap in literature. The study
is also expected to enlighten policy makers and implementers on the requirements for
Pension Case Management System, to adopt best practices and recommendations from
successful Government Pension Funds of other countries.
The focus of this study is on the GPAA at a provincial level in South Africa. The study was
conducted at the North West provincial branch of the GPAA due to time and resources
constraints. Data used in the study was collected only from employees and beneficiaries
of GPAA authorised to use the Pension Case Management System and beneficiaries
serviced by the system in the North West province.
1.8. Research design and Methodology
The study adopted a quantitative research approach to analyse the research problem in
questioned using a survey-based research design. The study utilises a cross-sectional
data obtained from employees and beneficiaries of the system. The study adopts
triangulation to validate the cross-sectional data as a scientific methods to verify accuracy
and diligence for rigour and reliability. Information, gaps and weaknesses from an
extensive literature review were used to develop the study instrument. The study
instrument was questionnaire used to collect data. A probability sample process was
followed and participants identified. The data was analysed using Statistical Package for
Social Sciences (SPSS) version 25.0 and suitability tests performed. Inferential statistics
tests were performed and results from the analysis used to test the hypothesis.
1.9. Theoretical Framework
The study undertook an extensive literature study to assess pension fund management
systems and focuses on the quality of the GEPF system; factors responsible for the poor
service quality offer to beneficiaries; whether the poor service quality is caused by
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administration inefficiencies or operational system failures as well as the impact of such
inefficiency on the lives of beneficiaries in the North West province of South Africa. The
study explains the legislative framework and its effects on eligible beneficiaries of the
pension fund systems. The study explores frameworks used by other researchers to
analyse pension fund management systems across the world and its impact thereof on
the lives of beneficiaries. The study focuses on the work of Ojo (2017:62), Dumais, Cutrell,
Jancke, Sarim and Robbins (2016:30), Choi et al., (2015:8), Petter et al., (2008:240) and
Sederal and Gable (2004:37). The study is designed with the intention of investigating
factors affecting efficiency in the delivery of quality service by the Pension fund
Administration System in North West province of South Africa to beneficiaries.
1.10. Definition of the key concepts
Pension fund – This is also referred to as a retirement fund. It is a non-profit making
institution that administers employees and employers provisions for when employees are
no longer physically or mentally able to work (Fourie, Falkena and Kok 1999: 33). Van
Wyk, Botha and Godspeed (2012: 122) added that they are organisations whose
members become entitled to benefits upon the occurrence of certain events such as
resignation or retrenchment, death or retirement. All retirement funds must be registered
in terms of the Pension Funds Act 24 of 1956 (Van Wyk et al 2012:16).
Pension fund organization - a) “This refers to any association of persons established
with the objective of providing annuities or lump sum payments for members or former
members of such association upon them reaching retirement dates, or for the dependants
of such members or former members upon the death of such members or former
members b) any business carried on under a scheme or arrangement established with
the object of providing annuities or lump sum payments for persons who are members or
has to benefit from the business under the scheme established when they reach their
retirement dates as well as their dependants upon the death of those members” (Juta's
Statutes Editors 2013:14)
Retirement funds – These are found in two forms which are the defined benefit and
defined contribution.
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Defined benefit funds - provide members with guaranteed benefits, where the amount
of the benefit is usually determined by a formula based on salary and years of
membership (Fourie et al 1999: 40; Van Wyk et al., 2012:179).
Defined contribution- This works like a “normal savings product where the member and
sponsor contributions are invested by the retirement fund and the retirement benefit is
determined by the accumulated value of contributions on retirement date” ( Van Wyk,
2012:178)
System quality – is defined as the system reliability, accessibility, adaptability,
integration, response time and privacy (Ji-fan Ren, Fosso Wamba, Akter, Dubey & Childe,
2017:122).
Information quality - is defined as completeness, accuracy, format and currency of the
information (Ji-fan Ren et al, 2017:124).
1.11. Summary of chapter one
The chapter sought to identify the factors that influence the efficiency of the GEPF in the
North West Province. The study was influenced by complaints from users of the system
about the long delays experienced in using the system and also the quality of information
that was generated by the system. This study is significant from both the theoretical and
practical perspectives in that it sought to add to the existing knowledge on pension fund
systems by identifying factors that can be used to improve a system. The study is limited
to employees at the GEPF and the beneficiaries of the pension fund. Chapter one
provided insight into the background and motivation for conducting the study. The study
focusses on the challenges faced with regards to pension fund management. The aim of
the study is to investigate the factors that affect the efficiency of the Pension fund
Administration System in North West. Based on previous literature and the motivation to
do this study, research questions and research objectives were formulated. Chapter two
provides comprehensive literature on the variables and existing literature and gaps to
bolster this study.
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CHAPTER TWO
LITERATURE REVIEW
2.1. Introduction
In chapter one, the problem statement, research questions and objectives were presented
and discussed. This chapter focuses on the literature review and consists of an
introduction, a segment that highlights the nature of the pension administrative system in
SA, administration of the pension fund administrative system in the North West Province,
quality of the pension administrative system as well as the factors responsible for poor
quality information to beneficiaries. The chapter further discusses inefficiency and
operational failures in the GEPF system, factors causing inefficiency in the system, impact
of the GEPF inefficiencies to the beneficiaries, method used to investigate pension fund
system and lastly the chapter summary.
2.2. Nature of the pension administrative system in SA
A pension is defined as the sum of funds that an employee invests during his employment
years from which the benefits are derived at the end of the employment period in the form
of a lump sum or monthly payments (Schawrz et al., 2014:1868). A system, on the other
hand, is defined as an investment process and the strategy of investment. A pension
system is therefore defined as “a benefit plan” in which a fixed contribution is invested
which is accessed upon retirement of the employee (Antoin et al., 2010:1178). It is worthy
to note that in literature different pensions have existed over time and Angelis and
Tessarimatis (2010:222) argue that the most notable and remarkable of such pension
regimes were employment pension funds, social and state pensions as well as disability
pension.
Angelis et al (2010:167) further define an employment pension scheme as a scheme in
which the employee has a contribution plan invested into the fund in order to save for
retirement. They argue that the pay as you go system is among the common methods
that is applied in most countries around the world, South Africa included. The second
category, which is the socio and state pension, is facilitated and financed by the state’s
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national annual budget in order to meet the socioeconomic wellbeing of the people within
that state.
In countries such as Brazil and South Africa, such pension funds target specific people
either experiencing some chronic and health care challenges (Lloyd, Sherlock et al.,
2012: 234). In disability pension, the pension regime aims at supporting those with
physical disabilities or those who are unable to contribute rationally towards
socioeconomic development of the country due to their physical infirmities (Antoin et al.,
2010:156).
Yet, around the world, scholars have been debating on which pension regime is the best
and most feasible that could be adopted to support people after retirement in order to
enhance a retiree’s socioeconomic welfare (Antoin et al., 2010:676; Angelis et al., 2010
and Tran et al., 2014:65). It is on this basis that the study explores the pension case
management system in the South Africa’s Government Employee Pension fund in order
to assess its effectiveness in meeting the needs of the stakeholders. According to
Scholes, Johnston and Whittington (2012:13), pension management systems
stakeholders are the people or entities who are directly involved in a designated
undertaking in a pension system operation. The stakeholders are defined as employees
who are responsible for the management and disbursement of the pension funds,
regardless of the type of scheme and retirees who serve as beneficiaries of such a
scheme.
van der Merwe (2004:123) adds that there is a difference between a pension fund and a
provident fund. The main difference is that with a pension fund, only one third of
accumulated amounts may be withdrawn as a lump-sum when a person retires (the
remaining two-thirds must be taken as a pension-monthly benefit), while the total
accumulated amount of a provident fund may be withdrawn at retirement (van der Merwe
2004:165). Pension funds can further be divided into ordinary pension funds (where
membership is restricted to employees) and retirement annuity funds (where membership
is open to self-employed persons).
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In South Africa, old age pension was introduced in 1928 with the aim of providing income
for only the poor elderly whites who had reached retirement without sufficient provision
from private occupational pension schemes and beneficiaries were subject to both age
and means test (Muchiri & Garen 2018:55). In 1944 the system was extended to Africans,
but still pension pay-outs were determined by race (Muchiri & Garen 2018:56) and
pension fund was legislated on the first of January 1958.
The legislation was referred to as the Pension Funds Act No. 24 of 1956. Since its
promulgation in 1958, the Act was only amended in the Government Gazette 41549 on
29 March 2018. The South African Pension Funds Act 24 of 1956 which was promulgated
into law in 1956 was aimed at providing “registration, incorporation, regulation and
dissolution of pension funds and for matters incidental thereto.” Amongst these incidental
matters are the retirement fund and death benefits (Nevondwe, 2010:167; Nevondwe,
Odeku, and Raligilia, 2017:33).
van der Merwe (2004:320) argues that pension is an important aspect of the social
security system, and forms an integral part of the social insurance and social assistance
components of social security in South Africa. Social insurance entails the programmes
that provide some insurance against life’s contingencies, such as disability,
unemployment and old age (van der Merwe 2004:322). Lloyd-Sherlock and Agrawal
(2014b:1571) add that pensions in South Africa are important for two main reasons -
increased personal income to boost consumption and assist older people afford direct
and indirect costs of treatment and medication.
There are various retirement legislations in South Africa and those legislations are
different from the Pension Funds Act, 24 of 1956 which also include the Pension Funds
Amendment Act 11 of 2007 and the Financial Services Laws General Amendment Act,
22 of 2008. The focus of these amendments is on the principle which allows the non-
member spouses to withdraw their pension interest on the date of the divorce order as
opposed to the date when the member exited the fund either as a result of resignation /
retrenchment/dismissal, disability, death and retirement (Nevondwe 2010:310). Other
legislation is with regard to pension fund systems in South Africa and these include the
21
Government Employees Pension Law, 1996, Transnet Pension Fund Act and the South
African Post Office Retirement Fund Act. According to Cadoni, Melis and Trudda
(2017:513), effective from first January 2012, the preamble of Regulation 28 of the
Pension Funds Act states that:
“Prudent investing should give appropriate consideration of any factor which may
materially affect the sustainable long-term performance of the fund’s assets,
including factors of an environmental, social and governance character.”
In addition, Sigwadi and Sigwadi (2009:1030 ) posit that pension funds are usually
established by governments with the objective to provide retirement income for their
members and beneficiaries. This requires that pension fund benefits are protected and
that members, dependants, or beneficiaries are able to receive their benefits after the
retirement or death of a member. The provisions that protect retirement fund benefits are
contained in section 37A of the Pension Funds Act of South Africa and states that ‘pension
benefits may be reduced, transferred, ceded, pledged, hypothecated, or attached only to
the extent permitted by section 37D of the Pension Funds Act 24 of 1956, the Income Tax
Act 58 of 1962, the Maintenance Act 99 of 1998, section 65 of the Magistrates Courts Act
32 of 1944, and the Divorce Act 70 of 1979’ (Sigwadi & Sigwadi 2009:1038).
Mangammbi (2015:344) reports that in 2007, the Financial Services Board of South Africa
issued a Pension Funds Circular 130 on good governance for retirement funds. Circular
130 requires that trustees put in place a documented code of conduct, an investment
statement, communication strategy to members, and have a performance appraisal
system for trustees. The circular also obliges new board members to receive
comprehensive training and all board members to be trained on a continuing basis.
Although the circular extensively covers elements relevant to the sound operation,
conduct, duties and obligations of boards of trustees, it is not enforceable.
22
2.3. Administration of pension fund system in the North West Province
This section provides an account of experiences by employees with the administration of
pension fund system in the North West Province as well as documented best practices
and guidelines.
The Government Pensions Administration Agency (GPAA) system used in the
administration of pension fund in the North West Province is the Pension Case
Management (PCM). GPAA is the agency administering pension benefits on behalf of the
Government Employees Pension Fund (GEPF). The GEPF may be considered the pride
of South Africa. It is the largest pension fund in Africa and administers a national
integrated pension scheme ahead of China government pension fund (Wang, 1995:2).
According to the official website, GEPF currently has in excess of 1.2 million active
members, and more than 400 000 pensioners and beneficiaries. The asset base is in
excess of R1.6 trillion - a distinguishing feature of GEPF. The task of GEPF is to ensure
that members and pensioners get quality service and financial security after retirement.
GEPF guarantees this by ensuring that all funds in safekeeping are diligently invested
and accounted for, and that benefits are paid out efficiently, accurately and on time.
GEPF is responsible for protecting its pensioners against the devaluation of their
pensions and maintaining the savings value of members yet to retire. How well has GEPF
done in achieving these goals and expectations remains a challenge. These are the
concerns the current research seeks to answer as motivated in the research question in
chapter one. To make pension administration more effective, the GPAA has implemented
a Pension Case Management (PCM) software to automate all pension administration
processes and procedures and to allow for innovative products and innovative ways of
addressing customer needs. How flexible and sophisticated is the GEPF Pension Case
Management System cannot be judged from the mission and vision statements. In terms
of geographical presence to cover the national client base, GPAA has a Client Walk-in
Centre in all the nine provinces of South Africa and in the North West Province there is a
provincial office serving as the Walk-in Centre for GEPF members, pensioners and the
beneficiaries. However, employees responsible for the implementation of the system are
23
experiencing challenges due to the perception that there are gaps in the GPAA system
that the current research intends to provide solutions in the North West Province.
2.4. Quality of the Pension Administrative System
According to Zwetsloot (2003:205), for a system to work efficiently, the South African
Pension Fund Quality Management and Management Systems based on ISO 9000 and
the quality approach derived from the European Foundation for Quality Management’s
(EFQM) business excellence model need to be implemented correctly. The approach is
based on ISO 9000 and aims to contribute to better quality, greater efficiency, and higher
value added per product and greater customer satisfaction.
Literature on the quality management of pension funds systems provides different quality
management cycles. However, the “Deming cycle” which starts with plans (rational, of
course) made by top management, including the allocation of personal accountabilities
and responsibilities is the one used in South Africa. Once the plan is finalised by top
management, the rest in the organisation follows with the implementation of the plan and
stakeholders (staff, customers) are informed of the rationale of the plan. The supposition
is that, rational arguments will convince the stakeholders in the organisation to behave
accordingly (Zwetsloot 2003:205). This approach often presupposes that there is “no one
size fits all” solution for every (potential) problem and that decent people always behave
rationally which makes it very attractive for people with technical or scientific background
with regard to the quality of the pension administration systems.
2.5. Factors responsible for poor quality of services to beneficiaries
The South African pre 1990 pension system catered for a segment of the white population
only to the neglect of the vast majority of the people. Post 1990 saw the pension fund
extended to cover other population groups that had been previously excluded and in
1993, the benefits to recipients were twice the median per capita income in rural areas.
According to Duflo (2006L:1), more than a quarter of previously disadvantaged household
children under age five live with a pension recipient. In South Africa, post 1990 witnessed
an exponential growth in number of pension beneficiaries, an increase in geographic
scope and the corresponding increase in budget for staff and infrastructure.
24
Such a massive change in a GPAA system can be described as a revolutionary change
rather than evolutionary or transformative change: this came with excessive pressure in
the demand for services. The increased demand for services invariably affects the quality
of services offered to beneficiaries caused by human factors such as skills, accessibility,
geographic location, information dissemination, quality of products offered and
procedures applying pension benefits. Technology was invested into as the key solution
to these challenges, specifically with regard to administration and operational processes
to bring about efficiency within the system. The GEPF adopted the Pension Case
Management (PCM) as the national Enterprise Resource Planning (ERP) solution
referred to in the research as the GEPF system. The effectiveness of customer service
and operations therefore hinges on the effectiveness of the GEPF system.
The adoption of the PCM also came with new challenges that arose from the use of
information communication system (ICT), notably operational failures in the ICT system,
complexity in ICT system, ease of accessing documents, tracking of files, time used to
complete forms online, requisite skills to operate the system and training staff. South
Africa initially started with a national centralized pension fund which required specific
expertise and resources as reported by Wang (1995:3). The argument was based on
reports of a highly defragmented Chinese government pension fund which gives an
insight into the complexity relating to the administration and provision of pension contrary
to the simplistic assumptions made by many citizens and experts. Wang (1995:1-5)
identifies key pension administration variables which if not properly handled lead to poor
quality of services. They include enumeration, record keeping, contribution collection,
benefit determination, benefit payments and other clientele services, regulating pension
funds, supervising the operation of the system and protecting insured persons from errors
and abuse.
However, the extent to which the North West Provincial GEPF fares when rated against
the eight parameters as identified by Wang (1995: 1-5), cannot be immediately
ascertained in the absence of a research study on challenges by GEPF beneficiaries in
the province. The pension administration in the North West province also has challenges
with regard to type of Old-Age Protection, Range of Coverage, Unit of Pooling, Source
25
of Funds, Method of Financing, Qualifying Conditions for Benefits, (7) Benefit Formula
and Management funds. Wang (1995: 6) posit that pension administration and pension
provision involve diligence on the part of the government, the staff, and the ICT solutions
for customers to get good service. There is need for proficient and standardized provision
and administration parameters outlined for an effective integration and efficient
administration and operation of a pension fund system.
2.6. Inefficiency and operational challenges the in the GEPF system
South African citizens and permanent residents over the age of 60 with an annual income
below R47, 400 and assets worth below R792, 000 living in South Africa are eligible to
receive the pension grant. In practice, the income but not the assets criterion is normally
used in the means test due to difficulties to ascertain the valuation of assets (Abel
2013:5). Furthermore, eligibility requirements do not stipulate that recipients are
prevented from gainful employment. As a result of these low barriers to access and the
substantial monetary value, more than 90% of South African citizens and permanent
residents over the age of 60 years are eligible to receive a pension grant. The increase
in the number of beneficiaries handled by the system put strain on the operational
capacity and capability of personnel operating the system. Mamabolo (2015:8) argues in
a study that the Government Employee Pension Fund cannot continue to accommodate
a large number of retirees due to the social security funding model of South Africa which
is not contributory in nature to the fund and such a practice is unsustainable.
Since the legislation of the South African Government Employee Pension Act in 1956, the
administration and operations have been characterised by some undesirable challenges
as it was designed to cater for a small privileged segment of the population as opposed
to the entire population. Mamabolo (2015:7) further argued that some of the fractures
exibited by the administration and operations of the system can be attributed to the post
democratic dispensation amendments of the original legislation which makes the GEPF
system inclusive of all citizens and permanent residents of South Africa. Furthermore, the
modes of funding pre-democratisation further create a gap between social old age grant
26
for the poor and tax incentivized private pension sector that is favourable to high income
earning individuals as opposed to low income individuals (Mamabolo 2015:13). The
means test applied by government is not consistent and as a result present a challenge
to the poor for the little that they save precluding them from accessing the government
grant and diminishes as their income rises while the tax incentive for the rich rises in value
as lifetime income increases.
2.7. Factors affecting efficiency of the system
Dumais, Cutrell, Cadiz, Jancke, Sarin and Robbins (2016:29) found that most information
retrieval systems are designed to facilitate information discovery. Hence, good quality and
efficient system must enable users to determine what clues, where information is
available for the system to retrieve such information.
DeLone and McLean (2016:78) are of the opinion that when investigating a system such
as the pension fund management system of South Africa, there are six important
dimensions that need to be considered when analysing its effectiveness. In the study,
“quality (technical level); information quality (semantic level); use of the system; user
satisfaction; individual impact and organizational impact (influence level)” are key
important dimensions to consider. The study further posits that these dimensions and
related measures are not independent success measures, but are interdependent
variables. Therefore, in the measurement of an operational system success, all constructs
must be considered and controlled for the system to be efficient.
In a situation where there is failure in one of these constructs, there is a possibility of
confounding results or an incomplete understanding of the system under investigation
(DeLone & McLean 2016:79). The current study adopts the model by DeLone and
McLean (2016:80) in the analysis of the stated objective (determine if the poor quality
service is cause by administration inefficiencies or operational system failure) based on
whether “(1) the constructs of the model provide a classification for the many information
system evaluation measures reported in the prior literature, (2) their approach begins to
identify relevant stakeholder groups in the process of evaluation, and (3) they suggest a
model of interdependencies among the constructs as shown below.
27
Figure 2. 1: DeLone and McLean (2003:75)
In the DeLone and McLean (2008:75) model, the dimensions were as follows:
a. System quality: This describes the desirable characteristics of an information
system which include aspects such as ease of use, systems flexibility, system
reliability and ease of learning, system features of intuitiveness, sophistication and
response times.
b. Information quality: This describes the desirable characteristics of the system
outputs which include aspects of management reports and Web pages as well as
relevance, understand ability, accuracy, conciseness, completeness, currency,
timeliness and usability.
c. Service quality: Service quality describes the quality of the support that system
users receive from the information system (IS) department and information
technology (IT) support personnel which regard to responsiveness, accuracy,
reliability, technical competence and empathy of the personnel staff.
d. System use: This focusses on the degree and manner in which staff and
customers utilize the capabilities of an information system (IS) and include aspects
of amount of use, frequency of use, nature of use, appropriateness of use, extent
of use and purpose of use.
e. User satisfaction: It focuses on users’ level of satisfaction with reports, Web sites,
and support services.
28
f. Net benefits: This focuses on the extent to which the system is contributing to the
success of individuals, groups, organizations, industries, and nations in aspects of
improved decision-making, improved productivity, increased sales, cost
reductions, improved profits, market efficiency, consumer welfare, jobs creation
and economic development.
According to Petter et al. (2008:9), there is an abundance of methods to measure net
benefits of a system at both the individual and organizational level as well as perceived
usefulness of which job impact is the most common measure at the individual level.
Furthermore, Torkzadeh & Doll (1999:101) as cited in Petter et al. (2008:12) further
created an instrument to measure different aspects of impact and task productivity, task
innovation, customer satisfaction, and management control. In the study, Petter et al.
(2008:8) argues that at the organizational level, a variety of measures are employed but
profitability measurements seem to be preferred. Ojo (2017:63) further supports the six
dimensions of DeLone and McLean (2016:80) in analysing a system to include:
System quality which measures the desirable characteristics of an information system
such as perceived ease of use, system features, response time and flexibility;
Information quality focuses on the content issues and characteristics of the information
systems output and it is measured by examining the output of an information system in
terms of timeliness, accuracy, reliability, and trustworthiness;
Service quality is measured in terms of the quality of support rendered by the information
system’s developer and assesses the service quality dimensions, such as assurance and
responsiveness by the systems support department, as well as the provision of user
training;
Intention to use/Use is concerned with assessing the manner in which an information
system is used and focus on the attributes of actual usage or sometimes, the frequency
of use;
29
User satisfaction is considered one of the most important measures of system success,
often measured by overall user satisfaction and can be assessed by capturing overall
user satisfaction with an information system and
Net benefits is one of the most important measures of information system success, and
constitutes the extent to which an information system contributes to the success of
various stakeholders, whether positive or negative and is measured by assessing
individual impact or organizational impact. This classification is similar to that of DeLone
and McLean (2016:79).
Furthermore, Sedera and Gable (2004:40) proposed the following attributes for
measuring system quality, information quality, individual impact and organisational
impact.
Figure 2. 2 Enterprise systems success (Sedera & Gable, 2004:45)
On the other hand, Petter et al. (2008:123) report that Li (1997:87) in a study found that
accuracy of output, reliability of output, relationship between users and the information
systems staff, user’s confidence in the systems, and timeliness of output were the most
important factors. The work by Li introduces the need to examine the relationship between
the staff using the system and the organisation’s Information System Department. Choi,
30
Kang and Moon (2015:2) highlighted that the most widely applied service quality
framework is SERVQUAL, “which articulates customers’ salient perceptions about a
vendor’s service reliability, assurance, empathy, and responsiveness as well as the
tangible aspects of the vendor’s infrastructure or appearance.” Service quality is defined
as a customer’s global, subjective assessment of the quality of an interaction with a
vendor, including the degree to which specific service needs have been met (Choi et al.
2015:44). The relationship factor is again evident as there is need to examine the nature
of the relationship between the vendor of the system and the end users.
2.8. Impact of the GEPF inefficiencies to the beneficiaries
Lloyd-Sherlock and Agrawal (2014: ) found that in South Africa, there are a number of
studies that have found pensions have a positive and significant effect on the health status
of older citizens. The study sampled 300 households in the Langeberg Health District of
the Western Cape in 1999. The results of this study found that older people in receipt of
non-contributory state pensions reported a significantly better health status compared to
household members. The finding reveals that the availability of a pension improves the
lifestyle of pensioners and inefficiencies in terms of administration and operations may
have adverse effects on beneficiaries.
Duplo (2003:1) confirms that “more than a quarter of black South African children under
age five live with a pension recipient.” This highlights the indirect impact the pension grant
have on the South African on the wellbeing of the majority of South Africans. Further
impact extends to accessibility of proper nutrition, health and education of the majority of
South African families.
2.9. Methods used to investigate inefficiencies in the pension fund system
Literature shows that there are limited studies focusing on factors affecting efficiency of
Pension fund Administration System in South Africa. However, there are studies that have
been conducted focusing on administration and operational inefficiencies systems
associated with different industries and organisation.
Nguyen ,Bellucci,and Nguyen (2014:120) used a systematic literature review from peer-
reviewed scholarly journal publications from 2001-2011 as an extension of DeLone and
31
McLean’s information system (IS) evaluation framework to develop an extended
framework for systems measurement. The extended framework from the study integrates
DeLone and McLean’s dimensions which include information quality, system quality,
service quality, intention of use and usage, user satisfaction and net benefits, together
with contingent dimensions such as systems development, implementation attributes and
organisational aspects. The study by Nguyen et al. (2014) was useful in that it provides
dimensions that can be used in this study to evaluate the pension system.
Petter et al. (2008:240) examined the evaluation of dimensions of system effectiveness.
Measuring system quality was undertaken by measuring the perceived ease of use in
addition to information quality as a key dimension of end-user satisfaction instruments.
The measurement of service quality in the study included the skill, experience and
capabilities of the support staff while measuring user satisfaction was usually undertaken
through the user satisfaction instruments develop by Doll et al. (1994:34).
Rivard et al. (1997:124) developed and tested an instrument that consists of 40 items that
measure eight system quality factors: namely, reliability, portability, user-friendliness,
understand ability, effectiveness, maintainability, economy and verifiability. The study
utilises exploratory factor analysis and applies both qualitative and quantitative research
approach. These approach and methods yielded good results for other countries and the
current study intends to adopt similar approach and method.
Choi et al. (2015:40) undertook a quantitative study with the purpose to evaluate the
performance of the newly developed information system in three public hospitals to
determine if the system was effective in improving user satisfaction and reducing
medication errors and personnel costs. The study specifically used the KPI satisfaction
scores for six information system success factors based on the DeLone and McLean
model and end user satisfaction was compared before and after system introduction. The
study further analyse the relationships among the six Information system (IS) success
factors by using path analysis for the Structural Equation Model (SEM) in order to identify
the important factors influencing the three information system success factors (Intention
to Use, User Satisfaction, and Net Benefits). The results of the study found all three quality
32
factors had a significant influence on user satisfaction and that user satisfaction strongly
influenced net benefits. The results suggest that hospitals should not only focus on
systems and information quality; rather, they should also continuously improve service
quality to improve user satisfaction and eventually reach the full potential of organisational
performance.
Tate, Sedera, McLean and Burton-Jones (2014:113) found that self-reports and user
perceptions, often based on surveys, are popular forms of measurement in studies that
have measured a system. They argue that other methods for evaluating the success of
information systems are decidedly challenging (Tate et al., 2014) because establishing
a relationship between the characteristics of a specific information system, and individual
or firm outcomes is difficult because information systems may be only one of many factors
that affect such outcomes. A further study on “IT outcomes have focussed on measuring
the value of information technology (IT) directly on how much value is added, but the
value from IT also arises indirectly through IT-enabled augmentation of non-IT inputs”
(Tate et al. 2014:1240).
Ojo (2017:61) used a survey research design and structured questionnaire to collect data
from health information management personnel in five Nigerian teaching hospitals. A
structural equation modelling technique was used to validate the model’s constructs. The
results found that system quality significantly influenced use (β = 0.53, p < 0.001) and
user satisfaction (β = 0.17, p < 0.001). Information quality significantly influenced use (β
= 0.24, p < 0.001) and user satisfaction (β = 0.17, p < 0.001) (Ojo 2017:60). The results
of the study validated the DeLone and McLean information system success model in the
context of a hospital information system in a developing country. Importantly, system
quality and use were found to be important measures of hospital information system
success (Ojo 2017:63). The study reveals that information systems should be designed
in such ways that are easy to use, flexible, and functional to serve their purpose. The
current study uses survey research design that has been found to be effective in the
studies discussed in this section. The research instrument development is guided by the
dimensions that were proposed by DeLone and McLean (2003:236) and have been used
in other studies.
33
2.10. Summary of the chapter
The review of the literature highlighted the depth of research in the area of the GEPF
system and other pension funds. The literature on pension in South Africa focuses on the
legal aspects such as the issue of divorce settlements and changes on legislation. The
review of the literature focused on how other similar information systems have been
evaluated. The focus on the evaluation of the efficiency of an information system is the
model by DeLone and McLean (2003) which focuses on dimensions that should be
considered when evaluating a system. This study uses the dimensions advocated by
DeLone and McLean (2003) in the review of the efficiency of the GEPF system in the
North West province of South Africa.
34
CHAPTER THREE
RESEARCH METHODOLOGY
3.1. Introduction
The purpose of this study was to investigate factors that affect efficiency of pension fund
administration system in the North West province of South Africa. The study employs a
mixed study exploratory design to seek an understanding of factors that are contributing
to inefficiencies in the administration and operations of the pension fund system. The
study applied elements of DeLone and McLean (2016: 228) six important dimensions that
need to be considered when analysing the effectiveness of a system. The chapter
includes a description of the research design, participants and sample selection, data
collection procedures, data analysis procedures, reliability and validity and ethical
considerations.
3.2. Research Paradigm
A philosophical paradigm a system in which research ideas are devised by researchers
in order to create knowledge of importance that will be adopted and used to solve the
problem at hand. Foster et al. (2002:70), in a quest to explain philosophical paradigm
presented a set of assumptions, strategies, axioms, and criterion that any research must
adopt and use in order to define its rigor. The rigor is best embraced in a framework to
ensure that efficient research artwork that is perfect is devised and this is critically chosen
if proper best fit paradigm is in line with the beliefs of reality is designed (Mills et al.,
2006:79). However, in order to understand the philosophical paradigm, three schools of
thoughts, namely, post-positivism, constructivism and pragmatism are to be adopted in
the study. Post-positivists have the belief that any research is knowledge based which is
interpreted scientifically using either quantitative or qualitative approach.
It is imperative to note that post-positivism does challenge the notion of absolute
truthfulness in knowledge due to its contextual evaluative approach (McEvoy and
Richards, 2003). Therefore, an objective investigation of a key research issues is
paramount if and only if the aspect of truth is to be uncovered and presented. Therefore,
35
using this philosophical paradigm the current study is to use a quantitative approach as
a way of certifying post positivism ideological thinking.
In as far as constructivism is concerned, researcher sought to understand an environment
in the research under taking is taking place. This philosophy does combine all aspects of
post-positivism and related interpretivist paradigms in a quest of explaining a situation. In
this approach, a researcher has a subjective meaning of the work at hand and prior
experiences. This is based on the participants’ perspectives in order to understand any
situation under investigation. This aspect of the research focuses on the effect of the
interaction between people in their environment and are qualitatively defined (Lever,
2013:78). In a pragmatism research approach, researcher uses diverse approaches to
comprehend the research problem (Creswell, 2014:155) and pragmatism approach
encompasses both qualitative and quantitative approaches to address the research
questions.
3.3. Research design that will be influenced by Research Paradigm
Babbie and Mouton (2011:74) submit that, a research design is a plan of how the
researcher intends conducting a study and a research methodology focuses on the
process, the type of tools to be used and the procedure to be followed. Further they state
that there are two types of research approaches available to researchers namely:
Quantitative and Qualitative. The data in the quantitative approach is mostly numbers and
this approach provides objectivity because the respondents are the ones who provide the
numbers. However, the data in qualitative approach is generally collected by observation
or unstructured interviews. They are usually in the form of words, phrases and pictures.
This approach provides a deeper understanding into what the researcher wants to find
and applying this approach, a researcher can choose a small sample sizes from a
population.
The current study made use of quantitative research approach with the intention to gain
objective understanding of the factors that influence the efficiency of the pension fund
system in the North West Province. Therefore, questionnaires were used to collect data
relevant to the research questions. Cross-sectional quantitative data was obtained
through face to face administration of questionnaires by the researcher.
36
The adoption of a cross sectional study design was as a result of the non-availability of
secondary data with regard the specific constructs use to investigate the factors causing
inefficiencies in the administration and operations of the GEPF system in the North West
province of South Africa. In this aspect, each employee or beneficiary participating was
either an employee working for the Government Pension Administration Agency or a
beneficiary from the GEPF system regardless of the level or contribution. Such a sample
was to allow the researcher acquire a holistic perspective of the system performance and
thereafter understand its level of efficiency. The study is to adopt a quantitative approach
to address the research questions.
3.4. Population and Sampling
The main purpose of this section is to identify the target population of the study, the
sample size, and the sampling procedure that used in the study.
3.4.1. Target Population
According to Borg and Gall (1989; 56), target population refers to all members of real
set of people, events or objects to which we generalize hypothetical results of the
research. Thus, the target population of this study includes all employees and customers
of pension fund system in the North West province of South.
3.4.2. Sample size and sampling procedure
A sample is a subset or portion of the total population to which research intends to
generalize the results (Wiersma: 1989; 47). The current study draws it samples from
employees working with the pension fund systems (staff members) and beneficiaries from
the pension fund system (pensioners,customers,clients, stakeholder). The study adopted
a probability sampling approach in which every individual in the population has an equal
chance to be included in the sample. Therefore, in this type of sampling, participants are
selected following a simple random method (Kothari: 2004; 59). The propose sample
population was stratified into two categories, namely, employees of the pension fund and
beneficiaries of the pension. The reason being the heterogeneous nature of the
population and was important to draw samples from a homogeneous set of population.
The proposed sampling procedure is suitable for the study because the researcher
37
selects participants at a point of entry into the GEPF facility based on the willingness of
individuals to participate in the process and avoiding time and distance constraints.
3.4.3. Response rate
A total of 140 participants were selected out of an estimated 150 employees and an
average of 300 beneficiaries who visit the centre daily. From the estimated total
population of 450, a sample of forty (70) questionnaires were distributed to the customers
and forty (70) were distributed to staff members of GPAA and beneficiaries in a week and
a 92.8 % response was rate achieved. Out of the total of forty three (70) questionnaires
distributed to beneficiaries, 67 were completed and returned resulting in a response rate
by beneficiaries of 95.7% compared to the total of 70 questionnaires distributed to staff,
they also completed and returned 63 resulting to a response rate of 90%.
3.4.4. Inclusion and exclusion of criteria
Inclusion criteria of participants refers to characteristics that the prospective subjects must
have if they are to be included in a study, whereas exclusion of criteria are those
characteristics that disqualify prospective subjects from inclusion in the study (Dawson:
2012; 25). The inclusion criteria for this is that participants must be a GEPF employee or
a GEPF beneficiary resident in the North West province of South Africa and visit the GEPF
centre during the data collection week. Employees and customers of pension fund
system in the North West province of South Africa not resident in the province was not
included in the samples.
3.5. Data collection and instrument used to collect data
In the study, data was collected using a structured questionnaires design in line with the
construct as guided by the dimensions proposed by DeLone and McLean (2003). This is
a common method of collecting cross-sectional quantitative data and the researcher
intends to gather specific information that directly answers the research questions and
test the hypothesis (Dawson, 2002; 28-29). A sample of the Instrument (questionnaires)
used in this study is attached as Appendix I.
The development of constructs contain in the questionnaire was derive from knowledge
the researcher got from the literature review. In order to remain objective in the design of
38
questionnaire and its content, the research objectives, questions and hypothesis were of
paramount consideration to avoid collecting data that may not be used in the study as this
is unethical. The questionnaire was divided into subsections, each section covering a
specific research construct. The last section asks demographic questions from the
respondents, and the other sections are evaluative measures of each research construct
that directly relate to the research hypothesis.
3.5.1. Pilot testing
Pre-testing of the questionnaire was perform and a total of 14 questionnaires were with
seven from each strata. Challenges identify with regard to completion of the
questionnaires as well as clarity of questions and construct were fixed before the final
instrument was use to collect data. After the pretesting, questionnaire was edited and
comments and suggestions raised incorporated into the final instrument.
3.6. Data analysis and tools
The data was collected using a questionnaire and the data was capture using SPSS
version 25. Descriptive statistics was performed and frequency tables and percentages
derived from the data. The t-test and the analysis of variance (ANOVA) test was perform
with the assistance of a software package (Statistical Package for Social Sciences-SPSS)
and AMOS graphics software. The results of the study are compared with the literature
review for a better understanding of the factors leading to the administration and
operational inefficiencies in the pension fund system in the North West province of South
Africa. Furthermore, the data was organised according construct, structure and sequence
of the questions outline in the questionnaire. The data was stored in an organised,
categorised, complete, and available for easy access. The storage of the data is also
done on cloud accounts for safety purposes.
3.7. Validity and Reliability
Fruhling and Lee (2005:2395) differentiated between the validity and the reliability.
Fruhling and Lee (2005:2395) is of the view that validity is all about confirming or
trustworthiness of the findings that will be provided by the researcher while reliability
focuses on identifying and documenting the accurate and consistent themes or features.
39
Krishnaswamy et al. (2009) further explained that validity has to do with the extent a
research instrument assesses what it is supposed to be assessing. According to Coopers
and Schindler (2011), Cronbach’s Alpha is used to measure the reliability and internal
consistency of the research instrument. The Cronbach’s Alpha coefficients is used to
determine how well the different items in a research instrument are correlated to one
another. The Cronbachs’ Alpha coefficients of 0,7 or higher is regarded as acceptable
levels of reliability (Coopers and Schindler, 2011). The Cronbach’s Alpha results are
presented in Table 3.1.
Table 3. 1 Reliability test
Data Cronbach’s
Alpha
Items Comments
Customers 0.921 12 Excellent and consistent
Staff 0.919 32 Excellent and consistent
The reliability analysis test revealed Cronbach’s alpha values for customer and staff
stated at 0.921 and 0.919 respectively. The Cronbach’s alpha values of 0.921 and 0.919
is an indication of the reliability of the instrument in measuring the system inefficiencies
and was greater than the cut-off point of 0.7. Therefore, the instrument was very reliable
measurement of all the constructs for the measurement of factors leading to
administration and operational inefficiencies in the pension fund system in the North West
province of South Africa.
3.8. Ethical Consideration
Before the administration of questionnaires, the researcher adequately briefs the
participants about the aim of the study. This is done to avoid any misunderstandings that
could arose during administration of questionnaire with regard to the purpose of the study.
Participants gave consent, and during the study confidentiality of the respondents were
guaranteed. To obtain the ethical clearance, an ethical clearance application was
completed and sent to the North West University Business School. The ethical clearance
application was approved and a letter to that effect was received from the Business
School.
40
3.9. Summary of the chapter
The chapter dealt with the research methodology used in the study, and focused on the
research philosophy, the research design of the study, the population and sampling, data
collection instruments, pilot testing, data collection procedures, data analysis and
organization, and ethical consideration of the study. The chapter covered the research
paradigm that alludes to research ideas developed by researchers to resolve the existing
problem. The chapter discussed the approach that the study adopt in understanding the
factors that impact on the efficient operation of the pension fund system in North West.
The focus area for the collection of data was indicated to be from employees and
customers who are using the system in the North West province.
41
CHAPTER 4
DATA ANALYSIS AND RESULTS
4.1. Introduction
Two streams of data are presented herein, the first being that of beneficiaries (customers)
obtained from semi-structured questionnaires administered and the second that of
employees’ data administered. The questionnaires were distributed to a sample of
beneficiaries and staff members of the GPAA within a week following a simple random
process. Both sets of questionnaires were divided into two sections. Section A deals with
personal information and Section B with statements relating to the three constructs. The
first part of analysis focuses on customers in the presentation of the results and the
second section on GPAA employees.
The findings from the data analysed and interpretation of the results are presented in this
chapter. The data was collected from staff of the Government Pensions Administration
Agency (GPAA) in the North West Province and beneficiaries (customers, retirees,
pensioners) utilising the pension case management system (PCM). The data from the
questionnaire were captured and analysed in order to address the research objectives
presented in Chapter one.
The research questions that guided this study were:
What are the personal characteristics of customers and employees involved
with the GEPF system?
What is the quality of GEPF system in used in South Africa?
What are the factors responsible for poor quality services provided to
beneficiaries?
Is the poor quality service a result of administration inefficiencies or
operational system failure?
What is the impact of system inefficiencies on beneficiaries?
Following a detailed analysis of the data, the quantitative data got was grouped into four
sub headings for interpretation:
42
Personal characteristics of beneficiaries and employees involved with the
Pension Case Management System,
Statistical analysis based on four perceived constructs (service quality,
system use, information quality and user satisfaction) by beneficiaries and
employees
4.2. Personal information of customers
This section presents the results on personal characteristics of the beneficiaries and how
these characteristics relate to the objectives of the study.
4.2.1. Gender of sample Beneficiaries
The figure below shows the gender distribution of the sampled beneficiaries.
Figure 4. 1 Gender
From Figure 4.1, it is evident that 64.9% of respondents were males compared to 35.1%
females. The analysis reveals that there are more male customers than female. The
results show that more males participated in the survey than females. It has been
indicated in the study that around 1944, pension pay-outs were determined by race
(Muchiri & Garen 2018:60) but currently the survey shows that irrespective of the race,
the number of males who took part in the survey exceeded the number of female
customers.
35.1
64.9
Female Male
43
4.2.2. Age distribution of beneficiaries by group
The figure below shows the age distribution of beneficiaries who visited the GPAA centre
during the week when the survey was done. The beneficiaries were grouped and the
findings presented in a bar-graph as depicted in Figure 4.2.
Figure 4. 2 Age group
The Figure 4.2 reveals that the majority of beneficiaries who visit the GPAA centre for
services are in the age range 36-46 years old, followed by 25-35 years of age, 47-57
years and 58-68 years of age respectively. The analysis demonstrates that approximately
64.8% of the respondents falls in age category below 46 years and the least being the
age group 58 to 68 years with 8.1%. This is contrary to the perception that GEPF services
are mostly utilised by pensioners. However, the analysis also shows that those who
utilised the services most are citizens who just got employment and those who have been
employed for a period of time but are not close to retirement. Employees of age group
58-68 years who make 8.1% aspiring retirees in the survey. The finding shows that the
factors impacting the efficiency of the pension fund system not only affect the young
people but also affects older people who are about to exit the fund (Mamabolo, 2015:10).
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
25 - 35 36 – 46 47 – 57 58 – 68
32.4 32.4
27.0
8.1
44
4.2.3. Beneficiaries level of Education
The figure below presents the level of education of the beneficiaries who visited the GPAA
centre during the week when the survey was done. Different levels of education were
established from Matric to Master’s degree and these are presented in bar-graph as
depicted in Figure 4.3.
Figure 4. 3 Level of education
As shown in the Figure 4.3 above, most of the respondents have at least a matric
qualification, junior degree, honours degree and Master’s degree. From Figure 4.3, there
is a total of 88.6% of respondents who have matric, 29.7% have a junior degree, 13.5%
have honours degree and 8.1% have Master’s degree. This finding is consistent with
findings in age distribution of respondents which reveal the majority of GPAA customers
were of age lower than 46 years. The implication of this finding is that the majority (57.4%)
of the respondents have some formal tertiary qualification and the remainder (48.6%) of
the respondents have matric. The measurement of service quality in the study included
the skill, experience, and capabilities of the support staff while measuring user satisfaction
and this was undertaken through the user satisfaction instruments developed by Doll et
al. (1994:38). It is evident the contributing factor to the inefficiency of the system could be
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
Matric Junior degree Honours degree Master’s degree
48.6
29.7
13.5
8.1
45
that employees lack skills of using the system. Evidently, management have to devise a
plan of empowering employees and customers on how to utilise the system effectively.
4.2.4. Nature of customers employment
The figure below presents the nature of customers’ employment of the beneficiaries who
visited the GPAA centre during the week when the survey was conducted. Types of
employment contracts were provided for and presented in bar-graph as depicted in Figure
4.4.
Figure 4. 4 Nature of employment
Figure 4.4 shows that the majority (59.5%) of them are employed on a permanent basis,
37.8% are on contract basis and the remaining 2.7% were serving as interns. User
satisfaction was undertaken through the user satisfaction instruments developed by Doll
et al. (1994:66). Commitment and lack skills of contract workers could also contribute as
a factor that has a direct impact on the efficiency of the pension fund system. This
challenge calls for management to come up with strategies of empowering the interns
and contract workers.
0.0
10.0
20.0
30.0
40.0
50.0
60.0
Permanent Contract Internship
59.5
37.8
2.7
46
4.2.5. Designated official to customers
The figure below presents the designated official to customers. Different levels of
designated official were provided for ranging from client service agent to senior manager
and presented in bar-graph Figure 4.5.
Figure 4. 5 Designation
Figure 4.5 above shows that the majority (48.6%) of the respondents are designated client
service agents, followed by supervisors (27.0%), middle managers (16.2%), and the least
is senior managers (8.1%). In contrast, the study by Njuguna and Arnolds (2010) on the
financial efficiency of pension funds in Kenya found that the majority of the respondents
were middle managers.
4.2.6. Access to GEPF systems by beneficiaries
The figure below presents the access to GEPF systems by beneficiaries who visited the
GPAA centre during the week when the survey was conducted. The results obtained are
presented in bar-graph Figure 4.6. With reference to the problem statement which reflects
basically the delays in the pension pay-outs cause dissatisfaction amongst recipients of
the money which again is attributed to the inefficiency of the pension fund system. The
findings reveal that the access to the system remains not a factor that has an impact on
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
Senior Manager Middle Manager Supervisor Client serviceAgent
8.1
16.2
27.0
48.6
47
the efficiency of the system. The findings show that the majority; 91.7% of users are able
to access the system on their own. Sedera and Gable (2004:44) highlighted attributes
that measure system quality and the impact of the system to individuals and
organisations. The model by DeLone and McLean has been adopted (2016:82) in the
analysis of the objectives in determining if the inefficiency of the system could be
attributed to operational issues; however as per the findings operational issues remain
not a problem as 91.7% of users can operate the system independently.
Figure 4. 6 Access to the system
The above Figure 4.6 illustrates that majority (91.7%) of the respondents access the
system on their own with no assistance and only the remaining 8.3% were accessing the
system through some form of assistance.
4.3. Statistical analysis on perception by beneficiaries based on three
constructs
This section of the study presents the results related to three constructs. The constructs
were Service quality, System use and User satisfaction. The respondents were asked to
choose from the following descriptive ranges: 1 = strongly disagree; 2 = disagree; 3 =
somewhat disagree; 4 = neutral, 5 = somewhat agree, 6 = agree and 7 = strongly agree.
To assist in the interpretation of the results, the researcher used the following interpretive
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
Personal(on your own and notassisted)
Assisted
91.7
8.3
48
scale for the results: at most 1.50 = strongly disagree; 1.51 – 2.50 = disagree; 2.51 – 3.49
= somewhat disagree; 3.50 – 4.49 = neutral; 4.5 – 5.49 = somewhat agree, 5.50 – 6.49 =
agree and at least 6.50 = strongly agree.
The results are summarised in the table below. The focus therefore dictates that any value
less than 3.50 is considered as not agreeing and the value greater than 4.49 is considered
as concurring. The results are summarised in Table 4.1.
Table 4. 1 Analysis on the perception beneficiaries based on three constructs
Analysis of service quality by customers/beneficiaries
Statements Mean Standard deviation N
Is ICT support personnel responsive 5,62 1,738 63
Is ICT support personnel reliable 5,41 1,518 63
Is ICT support personnel competent 5,44 1,501 63
Is ICT support personnel empathic 5,55 1,287 61
Analysis of system use by customers/ beneficiaries
Statements Mean Standard deviation N
I’m a frequent user of the system 6,38 0,982 63
I use the system to meet my requirements 5,92 1,256 63
I make appropriate use of the system 6,38 0,681 63
I make adequate(enough) use of the system 5,95 1,490 63
I use the system for the intended purpose 6,64 0,593 62
Analysis of user satisfaction by customers/employees
Statements Mean Standard deviation N
The system generates satisfactory reports 5,03 1,833 63
I’m satisfied with web services 4,84 1,878 63
I’m satisfied with user support services 5,70 1,392 63
49
4.3.1. Analysis on service quality by beneficiaries
The Table 4.1 above shows that the majority of respondents scored an average above
4.49 indicating that they concur with all the statements that ICT support personnel are
responsive, reliable, competent and empathetic.
4.3.2. Analysis of system use by customers
The Table 4.1 above also shows that the majority of respondents scored an average
above 4.49 indicating that they concur with all the statements that they are frequent users
of the system; they use the system to meet their requirements; they make appropriate
use of the system; they make adequate use of the system; and they use the system for
the intended purposes.
4.3.3. Analysis of user satisfaction by beneficiaries
Table 4.1 above further shows that the majority of respondents scored an average above
4.49 indicating that they concur with all the statements that the system generates
satisfactory reports; they are satisfied with web services; and lastly they are satisfied with
user support services.
4.4. Personal information of GEPF employees
This section presents the results on personal information of the GEFP employees.
4.4.1. Gender distribution of GEPF employees
The figure below shows the gender distribution of the sampled GEPF employees.
50
Figure 4. 7 Gender
Figure 4.7 above shows that the majority (54.1%) of respondents were females and the
balance (45.9%) males. This clearly demonstrates that female employees dominated the
male employees. The Public Service Commission (PSC) report (2016) on the assessment
of the service termination and pension pay-out in the public service also reported that the
majority of the respondents who participated in their report were females.
4.4.2. Age distribution by groups of GEPF employees
The figure below shows the age distribution of GEPF employees. The employees’ age
were grouped and the findings are presented in a bar-graph as depicted in Figure 4.8.
54.1
45.9
Female Male
51
Figure 4. 8 Age group
Figure 4.8 depicts that the majority (59.4%) of the respondents falls in age category below
47 years and the least being the age group 58 to 68 year with 8.1%.
4.4.3. Level of education of GEPF employees
The figure below presents the level of education of the GEPF employees. Different levels
of education were provided for from Matric to Honours degree and presented in bar-graph
as depicted in Figure 4.9.
Figure 4. 9 Level of education of employees
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
25 - 35 36 – 46 47 – 57 58 – 68
35.1
24.3
32.4
8.1
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
Matric Junior degree Honours degree
48.6
40.5
10.8
52
Figure 4.9 above depicts that majority (51.3%) of the respondents have some formal
tertiary qualification and the balance (48.7%) of the respondents have matric. The PSC
report (2016) also reported that the majority of the HR practitioners managing the
termination process have a Grade 12 matric as their highest qualification.
4.4.4. Nature of employment of GEPF employees
The figure below presents the nature of employment of the employees. Types of
employment contracts were provided for and presented in bar-graph as depicted in Figure
4.10.
Figure 4. 10 Nature of employment
The above Figure 4.10 shows that the majority (64.9%) of the respondents are employed
on a permanent basis, 32.4% are on contract basis and the balance 2.7% were serving
as interns.
4.4.5. Designated employees to customers
The figure below presents the designated employees to customers. Different levels of
designated employees were provided for ranging from client service agent to middle
manager and presented in bar-graph Figure 4.11.
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
Permanent Contract Internship
64.9
32.4
2.7
53
Figure 4. 11 Designation
Figure 4.11 above shows that the majority (64.9%) of the respondents were designated
client service agents, followed by supervisors (24.3%), and lastly middle managers
(16.2%). In contrast, the study by Njuguna and Arnolds (2010) on the financial efficiency
of pension funds in Kenya found that the majority of the respondents were found to be
middle managers.
4.4.6. Employees access to GEPF
The figure below presents the access to GEPF systems by the employees. The results
obtained are presented in bar-graph Figure 4.12.
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
Middle Manager Supervisor Client service Agent
10.8
24.3
64.9
54
Figure 4. 12 Access to the system
The above Figure 4.12 illustrates that majority (91.9%) of the respondents access the
system on their own with no assistance and the remaining 8.1% were accessing the
system with assistance.
4.5. Statistical analysis of GEPF employees based on six constructs
This section of the study presents the results related to the general questions. The
questions are divided into six sections, namely, System quality, Information quality,
Service quality, System use, User satisfaction and Net benefits. According to DeLone and
Mclean (2016: 78). These constructs need to be considered when analysing the efficiency
of the pension fund management system. Suffice to say that this study used the model to
investigate factors affecting the efficiency of the pension fund system in the North West
province.
The respondents were asked to choose from the following description ranges: 1 = strongly
disagree; 2 = disagree; 3 = somewhat disagree; 4 = neutral, 5 = somewhat agree, 6 =
agree and 7 = strongly agree. To assist in the interpretation of the results, the researcher
used the following interpretive scale for the results: at most 1.50 = strongly disagree; 1.51
– 2.50 = disagree; 2.51 – 3.49 = somewhat disagree; 3.50 – 4.49 = neutral; 4.5 – 5.49 =
somewhat agree, 5.50 – 6.49 = agree and at least 6.50 = strongly agree.
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
Personal(on your own and notassisted)
Assisted
91.9
8.1
55
The results are summarised in the following Table 4.2 below. The focus therefore dictates
that any value less than 3.50 will be considered as not agreeing and the value greater
than 4.49 will be considered as concurring.
Table 4. 2 Analysis of perception by GEPF employees based on six constructs
Analysis of system quality by employees
Questions Mean Standard
deviation
N
Do you consider the system easy to
use?
5,95 1,353 67
Does the system offer flexibility? 5,73 1,367 67
Is the system easy to learn? 5,92 1,256 67
Do you consider the system reliable? 5,30 1,431 67
Does the system offers sophistication in
your task performance?
5,18 1,507 64
Is the system response time good? 5,88 1,130 55
Analysis of information quality by employees
Statements Mean Standard
deviation
N
Does the system produce relevant
information
5,57 1,324 67
Does the system produce
understandable information
5,78 1,109 67
Does the system produce accurate
information
5,05 1,649 67
Does the system produce concise(brief
but comprehensive) information
5,14 1,456 67
Does the system produce complete
information
5,30 1,469 67
56
Does the system produce current
information
5,68 1,415 67
Does the system produce timely
information
5,58 1,228 66
Does the system produce usable
information
6,11 0,966 67
Analysis of service quality by employees
Statements Mean Standard
deviation
N
Is ICT support personnel responsive
(respond quick)
5,51 1,304 67
Is ICT support personnel reliable (can
depend on)
5,24 1,480 67
Is ICT support personnel competent
(knowledgeable)
5,62 1,320 67
Is ICT support personnel empathic
(Understand one’s feeling)
5,05 1,632 67
Analysis of system use by employees
Statements Mean Standard
deviation
N
I’m a frequent user of the system 6,22 0,787 67
I use the system to meet my job
requirements
6,14 1,058 67
I use the system for private use 3,95 2,285 67
I sometimes use the system after hours 4,29 2,236 64
I use the system during office hours
only
5,36 1,570 66
Analysis of user satisfaction by employees
Statements Mean Standard
deviation
N
57
The system generates satisfactory
reports
5,24 1,690 67
I’m satisfied with web services 5,30 1,469 67
I’m satisfied with user support services 5,54 1,282 67
Analysis of net benefits of system use by employees
Statements Mean Standard
deviation
N
The system has improved decision
making
5,92 1,090 67
The system has improved cost
reductions
5,68 1,396 67
The system has increased production 5,84 1,167 67
The system has improved the
turnaround time
6,14 1,159 67
The system has improved efficiency 6,00 1,291 67
The system has improved customer
welfare
5,95 1,201 67
4.5.1. Analysis of system quality by GEPF employees
The Table 4.2 above shows that the majority of respondents scored an average above
4.49 indicating that they concur with all the statements that they consider the system easy
to use; the system offers flexibility; the system is easy to learn; they consider the system
to be reliable; the system offers sophistication in their task performance; and the system
response time is good. The finding is explained by the objective which alludes to the
investigation of the quality of the GEPF system used in the North West Province. DeLone
and Mclean (2003:75) model describes the system quality as desirable characteristics of
information system that encompass variables such ease of use, system reliability and
response time. According to the findings the majority of the respondents concur with this
model in relation to the system quality.
58
4.5.2. Analysis of information quality by GEPF employees
The Table 4.2 above shows that the majority of respondents scored an average above
4.49 indicating that they concur with all the statements that the system produces relevant,
understandable, accurate, concise, complete, current, timely, and usable information.
Information quality according to DeLone and Mclean (2003:75) is described as
characteristics of system outputs which relate to relevance, concise, completeness and
time lines. The findings pertaining to information quality are explained by the research
objective that alludes to determining if poor quality service is caused by administration
inefficiencies or operational failure in the system. The majority of the respondents share
the same view with DeLone and Mclean model.
4.5.3. Analysis of service quality by GEPF employees
The Table 4.2 above shows that the majority of respondents scored an average above
4.49 indicating that they concur with all the statements that ICT support personnel are
responsive, reliable, competent (knowledgeable) and empathetic (understand one’s
feelings). The finding relates to the research objective about determining the cause of
poor quality service. According to Delone and Mclean (2003:75) service quality refers to
the support received by users from the information systems department. The findings
attest to the notion that IT personnel are responsive and reliable which shows that their
performance conforms to the model.
4.5.4. Analysis of system use by employees
The Table 4.2 above shows that the majority of respondents scored an average above
4.49 indicating that they concur with three statements that they are frequent users of the
system; they use the system to meet their job requirements; and that they make use of
the system during office hours only. The two statements which obtained an average score
of between 3.50 and 4.49 reveal that the respondents were indecisive on the constructs
that they use the system for private use, and that they sometimes use the system after
hours. This finding concurs with what DeLone and Mclean (2003:75) describe with regard
to system use. The model indicates that system use focuses more on the capabilities of
the information system concentrating on the appropriateness of use, frequency of use
and the purpose of use. The finding explains the objective on the quality of the GEPF
59
system. In terms of this aspect, the majority of users confirm the model of DeLone and
Mclean that they use the system to meet their job requirements.
4.5.5. Analysis of user satisfaction by GEPF employees
The Table 4.2 above shows that the majority of respondents scored an average above
4.49 indicating that they concur with all the statements that the system generates
satisfactory reports; they are satisfied with web services; and that they are satisfied with
user support services. The finding is explained by the objective that sought to determine
the overall satisfaction in using the GEPF system in the North West province. According
to DeLone and Mclean (2003:75) model user satisfaction focuses on users’ level of
satisfaction with reports and support services. As per the findings the majority of the
respondents expressed their satisfaction with regard to satisfactory reports produced by
the system. This is indicative that they agree with the explanation of the model.
4.5.6. Analysis of net benefits by GEPF employees
The Table 4.2 above shows that the majority of respondents scored an average above
4.49 indicating that they concur with all the statements that the system has improved
decision making, cost reductions, production, the turnaround time, efficiency, and
customer welfare. This finding is explained by the objective which talks to the impact of
the system on the lives of the beneficiaries and the overall satisfaction in using the GEPF
system. DeLone and Mclean (2003:75) explain that net benefits focus on the actual
benefits derived by individuals, groups, and organisations from the use of the system.
According to the findings the respondents attest to the explanation as per the model. The
findings indicate that they concur that the system contributes positively to improved
turnaround time, efficiency, informed decision making which are benefits that the GEPF
gain from using the system.
60
4.6. Means score test on customer perception using personal characteristics
In order to determine the difference in pension fund management system of South Africa
mean scores and demographic variables, the t-test and analysis of variance test (ANOVA)
were computed. The t-test was computed in the gender category only. ANOVA was not
appropriate for gender since gender has only two variables (female and male).
Table 4.3. Means scores tests on customer perception using personal characteristics
Means score test by gender on customers/beneficiaries perception
Factors t-value P-value
Service quality -1.521 0.137
System use -0.539 0.593
User satisfaction -0.239 0.813
Overall -0.566 0.575
Means score test by age group on customers/beneficiaries perception
Factors F-value P-value
Service quality 0.288 0.834
System use 1.438 0.249
User satisfaction 2.534 0.074
Overall 1.467 0.241
Means score test by level of education on customers/beneficiaries perception
Factors F-value P-value
Service quality 1.018 0.397
System use 0.775 0.517
User satisfaction 0.990 0.410
Overall 0.837 0.483
Means score test by nature of customer/beneficiaries employment
Factors F-value P-value
Service quality 0.915 0.410
System use 0.603 0.553
User satisfaction 4.265 0.022
Overall 2.349 0.111
Means score test by designation to customers/beneficiaries
Factors F-value P-value
61
Service quality 0.319 0.812
System use 1.647 0.197
User satisfaction 1.963 0.139
Overall 1.295 0.292
4.6.1. Means score test on gender of customers
The results presented in the above Table 4.3 revealed that there is no statistically
significant difference between the gender of the respondents and their perception on
pension fund management system. Therefore, the gender of the respondents does not
have a bearing on how they responded to the questions on pension fund management
system.
4.6.2. Means score test by age group of customers
According to the results in Table 4.3, there were no statistically significant differences
found in the mean scores of the age group of the customers and their perception on
pension fund management system.
4.6.3. Means score test by level of education of customers
Table 4.3 revealed that the respondents’ perception on pension fund management
system with the highest qualification has no significant difference recorded between the
highest qualification of the respondents and their perception on pension fund
management system.
4.6.4. Means score tests by nature of employment of customers
Table 4.3 shows that, with nature of employment, there is a significant difference recorded
in customers’ user satisfaction, since the p-values of 0.022 is less than 5% level of
significance. This means that nature of employment has a bearing on how the customers
responded on the questions on their user satisfaction. The results further revealed that
there is a statistically insignificant defference between service quality, system use and
the overall scale of pension fund management system with the nature of employment.
62
4.6.5. Means score test by designation to customers
Using the 5% level of significance, the results in Table 4.3 reveal statistically insignificant
differences in the mean scores of the designation and the perception of respondents on
pension fund management system.
4.7. Mean scores of employees perception using personal characteristics
In order to determine the difference in pension fund management system of South Africa
mean scores and demographic variables, the t-test and analysis of variance test (ANOVA)
were computed. The t-test was computed in the gender category only. ANOVA was not
appropriate for gender since gender has only two variables (female and male).
Table 4. 4 Mean scores of employee’s perception using personal characteristics
Means score test on perception by gender of GEPF employees
Factors t-value P-value
System quality -0.119 0.906
Information quality 1.196 0.240
Service quality 0.292 0.772
System use 0.071 0.944
User satisfaction 0.481 0.634
Net benefits -0.686 0.497
Overall -0.099 0.922
Means score test on perception by age group of employees
Factors F-value P-value
System quality 0,251 0,860
Information quality 0,666 0,579
Service quality 0,562 0,644
System use 1,762 0,174
User satisfaction 1,065 0,377
Net benefits 0,941 0,432
Overall 0,839 0,482
Means score test on perception of level of education by GEPF employees
Factors F-value P-value
System quality 0.255 0.776
Information quality 0.401 0.673
Service quality 0.612 0.548
63
4.7.1. Means score test by gender of GEPF employees
The results presented in the above table reveal that there a statistically insignificant
difference between gender of the respondents and their perception on pension fund
management system. Therefore, the gender of the respondents does not have a bearing
on how they responded to the questions on their perception on pension fund management
system.
4.7.2. Means score test by age group of employees
There were no statistically significant differences found in the mean scores of the age
group of the respondents and their perception on pension fund management system.
System use 0.261 0.772
User satisfaction 0.094 0.911
Net benefits 0.033 0.967
Overall 0.300 0.743
Means score test on perception of the nature of employment by GEPF employees
Factors F-value P-value
System quality 2.378 0.108
Information quality 6.393 0.004
Service quality 3.921 0.029
System use 1.582 0.220
User satisfaction 3.482 0.042
Net benefits 2.762 0.077
Overall 8.120 0.001
Means scores test on perception of designation of GEPF employees
Factors F-value P-value
System quality 0.339 0.715
Information quality 1.970 0.155
Service quality 1.549 0.227
System use 0.306 0.738
User satisfaction 1.461 0.246
Net benefits 2.422 0.104
Overall 0.918 0.409
64
4.7.3. Means score test by level of education of employees
Table 4.4 displays that there is a statistically insignificant difference found between the
highest qualification of the respondents and their perception on pension fund
management system.
4.7.4. Means score test by nature of employment of employees
Using 5% level of significant, the results in Table 4.4 revealed that there is a statistically
significant difference recorded between information quality, service quality and user
satisfaction with the nature of employment. There is also a statistically significant
difference recorded between the overll scale of pension fund management system with
the nature of employment. The results further show that there is a statistically insignificant
difference between system quality, system use and net benefits with the nature of
employment.
4.7.5. Means score test by designation of employees
The results in Table 4.4 revealed a statistically insignificant difference in the mean scores
of the designation of the respondents and their perception on pension fund management
system.
4.8. Chapter summary
The chapter presented empirical data analysis results of the study. The data was
analysed in order to answer the research questions presented earlier in Chapter 1. The
research instrument was tested for reliability using Cronbach’s alpha and it was
concluded that the data is consistent. The next section discussed the personal
characteristics of the respondents. The data was then analysed using the SPSS
(Statistical Packaging for Social Science) system and the SPSS output was converted
into the graphs and tables. The next chapter discusses the results, offers some
conclusion and suggests the recommendations.
65
CHAPTER 5
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.1. Introduction
Chapter five presents and discusses findings of the study. The discussion is based on the
results obtained on each of the research objectives presented in Chapter 1. Based on the
discussions, conclusions and recommendations are derived and submitted. Finally,
areas that need further research are proposed.
5.2. Discussion of findings
This section discusses the findings of the study. The findings are discussed per objective.
5.2.1 Objective one: To investigate the quality of the Government Pensions
Administration (GPAA) system used in the North West province.
From the results presented in Chapter four, the quality of the GPAA system was
investigated and found to be preferred by staff. The findings based on analysis of
employee’s perceptions revealed that the majority of employees are able to use the
system without any assistance. Employees implementing the GEPF system found the
system easy to use, offered flexibility, was easy to learn, reliable but sophistication in the
performance of task and a quick response time. However, it has been indicated in the
study that there are contract workers, employees who have matric only, employee interns
and those who use the system for private use. Using the system for private use defeats
the purpose of why the pension case management system was acquired. In 2017, there
was an acknowledgment by the Public Service Commission and the Public Service and
Administration Performance Monitoring and Evaluation Committee in the South African
National Assembly that there were delays in the pay-out of pension benefits to retirees in
South Africa (Parliamentary Monitoring Group, 2017:10). Hunter (2017: 5) adds that in
South Africa there exist a large number of retirees who are witnessing delays in unpaid
pension fund benefits that can be attributed to inefficiencies in the administration of the
pension fund system. Using the system for private use and employees who lack skill to
66
operate the system efficiently are factors that impact on the smooth operation of the
system resulting in the delays in the payouts.
The end users of the system or customers indicated that they are frequent users of the
system and they use the system to meet their requirements. They also highlighted that
they make appropriate use of the system, that they make adequate (enough) use of the
system, and they use the system for the intended purpose.
5.2.2 Objective two: To determine factors responsible for the poor service quality
provision to beneficiaries.
From the results presented in Chapter four, the service quality provision to beneficiaries
of the GPAA system was investigated and found to be good. The findings based on
analysis of beneficiary’s perceptions revealed that the service quality provision to
beneficiaries by the staff is of good quality. The above notion was supported by the data
that revealed that the ICT support personnel are responsive, reliable, competent and
empathic. The staff also confirmed that the system produce relevant, understandable,
accurate, concise, complete, current, timely, and usable information.
According to Wang (1995:1-5), there are administrative variables that if not handled
properly can lead to poor quality service. These variables include Contribution collection,
Benefit determination, Benefit payments and other clientele services among others. The
survey conducted shows that these administrative variables were taken care of in the
Government Pensions Administration Agency hence the results confirm that the service
provided by staff to beneficiaries is of good quality.
5.2.3 Objective three: To determine if the poor quality service is caused by
administration inefficiencies or operational system failure.
Based on the results presented in Chapter four, the quality service caused by
administration inefficiencies or operational system failure of the GPAA was investigated.
The findings based on analysis of employees’ perceptions revealed that the users of the
system emphasised that the support for the ICT division of the GEPF is of good standard.
The notion was supported by the data which clarified that the ICT support personnel are
67
responsive (respond quick), reliable (can depend on), competent (knowledgeable) and
empathic (understand one’s feeling). The results are in line with the views by DeLone and
McLean (2016) who indicated that the use of technology lead to good quality service.
5.2.4 Objective four: To determine the impact of the system inefficiencies on the
lives of beneficiaries.
Based on the results presented in Chapter four, the impact of the system inefficiencies
on the lives of beneficiaries of the GPAA was investigated. The findings based on analysis
of employees’ perceptions revealed that the staff members of GEPF are of the view that
the system has more benefits than the negatives. The notion is supported by the data
revealing that the system has improved decision making, cost reductions, production, the
turnaround time, efficiency, and customer welfare. In contrary, the study by Hunter (2017:
5) reported that in South Africa there is an existence of large number of retirees who are
witnessing delays in unpaid pension fund benefits that can be attributed to inefficiencies
in the administration of the pension fund system.
5.2.5 Objective five: To determine the overall satisfaction on the use of the
Government Pension Administration Agency (GPAA) system in the North West
province.
Derivative from the results presented in Chapter four, the overall satisfaction on the use
of the Government Pension Administration Agency (GPAA) system in the North West
province was investigated. The findings based on analysis of both beneficiaries and
employees’ perceptions revealed that the overall satisfaction on the use of the
Government Pensions Administration Agency (GPAA) system in the North West province
appears to be good. The notion is supported by the data which revealed that the system
generates satisfactory reports, that they are satisfied with web services, and lastly they
are satisfied with user support services. The literature reveals that the core function of
Government Pension Administration Agency (GPAA) is to ensure that members and
pensioners get quality service, peace of mind about their financial security after retirement
(Zwetsloot, 2003:205). This statement supports the finding which shows that the
customers and staff are satisfied with user support a service which ensures the efficient
functioning of the system.
68
5.3. Conclusion
The study investigated the factors affecting efficiency of Pension Fund Administration
System in the North West Province: a case of Government Pension Administration
Agency, South Africa. The study made an attempt to answer five key objectives as
presented in the first chapter. Each objective was assigned questions in the questionnaire
which directly or indirectly had to answer. The study addresses all the five objectives.
The quality of the GPAA system was found to be preferred by the majority staff. Both the
employees and beneficiaries of the GEPF found the system easy to use and without any
assistance. The majority also highlighted that the system offer flexibility, easy to learn,
reliable but sophistication in the performance of task and provides for a quick response
time. The service quality provision to beneficiaries of the GPAA system was found to be
good. The staff also confirmed that the system produce relevant, understandable,
accurate, concise, complete, current, timely, and usable information. The users of the
system emphasised that the support for the ICT division of the GEPF is of good standard
and are responsive (respond quick), reliable (can depend on), competent
(knowledgeable) and empathic (Understand one’s feeling). The overall satisfaction of
both beneficiaries and employees on the use of the GPAA system in the North West
province appeared to be good.
In general even though the organisation experienced quiet a number of disgruntled
members citing the inefficiency of the system which they alleged cause the delay in the
payment of benefits, it appears from the findings of the study that the majority of the users
being the employees and the customer or beneficiaries of the GPAA and GEPF concur
that the system is not the problem as indicated by their ratings. A study by Purce
(2014:11) highlights that the delay in the pension pay outs is caused by employees who
lack skills to operate the system however in terms of quality as reflected on table 4.2, the
majority of users are in agreement that the system gives accurate, concise, complete,
understandable and timely information. This attests to the notion that the factors
impacting on the efficiency of the pension fund system is not related to the system.
69
5.4. Managerial implications
According to DeLone and Mclean (2016:78) there are six dimensions that needs to be
considered when analysing the efficiency of the pension fund system. In order to conclude
that the system is efficient it has to satisfy the following dimensions: system quality,
information quality, service quality, system use, user satisfaction and net benefits. The
findings according to the system quality shows that the majority of the respondents concur
that the system is flexible and reliable. This in itself would assist management in
producing quality data that can be relied upon. The users also concur that the service
quality which describe the support from information system is good. This is one aspect
that could help management and the organisation to perform well with the system that
produces accurate, concise and reliable information within time lines.
5.5. Recommendations
The problem statement indicates that pensioners are dissatisfied with prolonged delays
of pension pay-outs attributed to the inefficiencies in the administration of the pension
fund system however the findings from the survey conducted from all users; employees
and customers GPAA and GEPF are of the view that the system is efficient, therefore the
survey gives justification that the problem is not with the inefficiency of the system.
The following are recommendations of the study:
A comparative study should be considered and undertaken to look at the similar
objectives with other provincial GEPF offices. Other provincial offices might be
performing well and it would assist to do the comparison and benchmarking in an
effort to emulate their style of working.
One could consider a study to investigate the general satisfaction of the employees
of GEPF and factor in the ICT aspect as reflected on the current study. In an
organization where employees are dissatisfied, the morale normally goes down
and this has a negative impact on performance. It would do the organization good
to conduct a survey to assess the level of employee satisfaction, identify gaps and
address those gaps in a manner that can benefit the organization and its
customers
70
A study to investigate the turnaround time of claims made to GEPF and the
satisfaction level of the pension recipients should also be considered. The issue of
the turnaround time, if properly addressed, could significantly reduce the number
of disgruntled members.
A study to investigate and develop effective strategy to minimise complaints from
claimants should also be undertaken in future. This could be addressed by
improving the turnaround time, continuous training of employees on product
knowledge.
71
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74
APPENDICES
Dear Participant
My name is Brenda Moreeng-Mogotsi, an MBA11 student at the North-West University.
You have been selected to participate in this survey which aims at exploring the factors
affecting the efficiency of Pension Fund Administration system in North West Province: A
case of Government Pensions Administration Agency, South Africa. The completion of
the attached questionnaire will require twenty minutes of your time.
There are no anticipated risks or discomforts related to this research. Individuals will
remain anonymous and results will not be used to identify individuals. The result of the
study will be used for academic purpose only. If you have question you can contact
Brenda Moreeng-Mogotsi at 018 388 9402 or 072 213 6825
Instruction for completion of the questionnaire
Kindly read all the questions carefully and select one that best represent your answer.
Please use a cross to mark the answer you feel is correct.
Section A – Personal Information
This section seeks to understand information about you and your personal background.
The information is needed to actually enable myself as the researcher to compare the
group of the respondents.
Gender Female
Male
75
Age category 25 – 35
36 – 46
47 – 57
58 – 68
69+
Highest qualification Matric
Junior degree
Honours degree
Master’s degree
Doctoral degree
Nature of employment Permanent
Contract
Internship
Designation or your position Senior Manager
Middle Manager
Supervisor
76
Client service Agent
Access to the system Personal(on your own and not assisted
Assisted
No access
77
SECTION B
78
APPENDIX I: RESEARCH INSTRUMENTS
Staff Survey Questionnaire
The study is aimed at analysing factors that affect efficiency of pension fund administration system in the North West
Province of South Africa.
Please circle the appropriate number to indicate the level of your agreement or disagreement with the following statements
on a scale of 1 to 7, where 1 = strongly disagree, 2 = disagree, 3 = somewhat disagree, 4 = neutral (neither disagree nor
agree), 5 = somewhat agree, 6 = agree, and 7 = strongly agree.
Strongly
disagree
Disagree Somewhat
disagree
neutral somewhat
agree
Agree Strongly
agree
System Quality (SQ) 1 2 3 4 5 6 7
SQ1. Do you consider the system easy to use?
SQ2. Does the system offer flexibility?
SQ3. Is the system easy to learn?
SQ4. Do you consider the system reliable?
SQ5. Does the system offers sophistication in your task
performance?
79
SQ6. Is the system response time good?
Strongly
disagree
Disagree Somewhat
disagree
neutral somewhat
agree
Agree Strongly
agree
Information Quality (IQ).
1 2 3 4 5 6 7
IQ1. Does the system produce relevant information
IQ2. Does the system produce understandable information
IQ3. Does the system produce accurate information
IQ4. Does the system produce concise(brief but comprehensive)
information
IQ5. Does the system produce complete information
IQ6. Does the system produce current information
IQ7. Does the system produce timely information
IQ8. Does the system produce usable information
80
Service Quality (SQ)
Strongly
disagree
Disagree Somewhat
disagree
neutral somewhat
agree
Agree Strongly
agree
1 2 3 4 5 6 7
SQ1. Is ICT support personnel responsive(respond quick)
SQ2. Is ICT support personnel reliable(can depend on)
SQ3. Is ICT support personnel competent(knowledgeable)
SQ4. Is ICT support personnel empathic(Understand one’s feeling)
System Use (SU)
Strongly
disagree
Disagree Somewhat
disagree
neutral somewhat
agree
Agree Strongly
agree
1 2 3 4 5 6 7
SU1. I’m a frequent user of the system
SU2. I use the system to meet my job requirements
SU3: I use the system for private use
SU4. I sometimes use the system after hours
SU5. I use the system during office hours only
81
Strongly
disagree
Disagree Somewhat
disagree
neutral somewhat
agree
Agree Strongly
agree
User Satisfaction (US) 1 2 3 4 5 6 7
US1. The system generates satisfactory reports
US2. I’m satisfied with web services
US3. I’m satisfied with user support services
Strongly
disagree
Disagree Somewhat
disagree
neutral somewhat
agree
Agree Strongly
agree
Net Benefits (NB) 1 2 3 4 5 6 7
NB1. The system has improved decision making
NB2. The system has improved cost reductions
NB3. The system has increased production
NB4. The system has improved the turnaround time
NB5. The system has improved efficiency
NB6. The system has improved customer welfare
82
Customer Survey Questionnaire
The study is aimed at analysing factors that affect efficiency of pension fund administration system in the North West province of South Africa.
The intent of this section is to obtain some information about individuals who respond to this survey. Information gathered about participants will be
treated confidentially, and only group data will be reported as an outcome of this research.
Please circle the appropriate number to indicate the level of your agreement or disagreement with the following statements on a scale of 1 to 7,
where 1 = strongly disagree, 2 = disagree, 3 = somewhat disagree, 4 = neutral (neither disagree nor agree), 5 = somewhat agree, 6 = agree, and 7
= strongly agree.
Service Quality (SQ)
Strongly
disagree
Disagree Somewhat
disagree
neutral somewha
t agree
Agree Strongly
agree
1 2 3 4 5 6 7
SQ1. Is ICT support personnel responsive
SQ2. Is ICT support personnel reliable
SQ3. Is ICT support personnel competent
SQ4. Is ICT support personnel empathic
83
System Use (SU)
Strongly
disagree
Disagree Somewhat
disagree
neutral somewhat
agree
Agree Strongly
agree
1 2 3 4 5 6 7
SU1. I’m a frequent user of the system
SU2. I use the system to meet my requirements
SU3: I make appropriate use of the system
SU4. I make adequate(enough) use of the system
SU5. I use the system for the intended purpose
User Satisfaction (US) Strongly
disagree
Disagree Somewhat
disagree
neutral somewhat
agree
Agree Strongly
agree
1 2 3 4 5 6 7
US1. The system generates satisfactory reports
US2. I’m satisfied with web services
US3. I’m satisfied with user support services
84